AFM291-ch07

AFM291-ch07 - CashandReceivables Chapter 7 AFM 291 chapter...

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AFM 291 chapter 7 1     Chapter 7 Chapter 7                                       Cash and Receivables  Cash and Receivables 
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AFM 291 chapter 7 2 Topics Cash Receivables Recognition and Measurement Discounts Allowance for Doubtful Accounts Notes Receivable Disposition/Transfer of Accounts Receivable Ratios
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AFM 291 chapter 7 3 What is Cash? Cash that is reported as current asset must be readily available and be free of restrictions Cash consists of: coins, currency, available funds on deposit, and petty cash (also includes money orders, certified cheques, cashier’s cheques, personal cheques, bank drafts, and usually savings accounts) Certificates of deposits (CDs) and short-term paper are classified as cash equivalents or short-term investments Postdated cheques, travel advances, and postage stamps on hand are not classified as cash
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AFM 291 chapter 7 4 Restricted Cash Restricted cash is money set aside for a special purpose (compensating balance, sinking fund, pension assets) If material , must be separately disclosed and reported in the Current Assets section or classified separately in the Long-Term Assets section, depending on availability or disbursement
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AFM 291 chapter 7 5 Other issues Cash in Foreign Currencies - converted into Canadian $ on the balance sheet date Bank Overdrafts - reported under Current Liabilities (offsetting only allowed where cash is available in another account at the same bank) Management and control of cash (Appendix 7A)
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AFM 291 chapter 7 6 Stantec – Current Assets
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AFM 291 chapter 7 7 Cash Equivalents Cash Equivalents Defined as “short-term, highly liquid investments that are readily convertible to known amounts of cash…subject to an insignificant risk of change in value.” Original maturity is generally three months or less Excludes equity securities Examples: treasury bills, money-market funds, commercial paper Cash equivalents are reported at fair value Under IFRS some equity instruments can be classified as cash equivalents. (For example, preferred shares acquired within a short time of their maturity and with a specified redemption date.)
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AFM 291 chapter 7 8 Receivables: Issues Types of receivables Current versus non-current Trade/accounts receivables versus nontrade receivables Recognition and valuation of accounts receivable Discounts Uncollectible accounts Sales returns and allowances Disposition of receivables
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AFM 291 chapter 7 9 Nontrade receivables Examples: Advances to officers, employees, subsidiaries, or other companies Amounts owing from sale of capital assets or investments Income taxes receivable; investment tax credits receivable; HST/GST payments recoverable Dividends and interest receivable Claims against insurance companies, against creditors for returned or damaged goods, against customers for returnable items
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AFM 291 chapter 7 10 Intrawest – Receivables
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AFM291-ch07 - CashandReceivables Chapter 7 AFM 291 chapter...

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